VICTORIA - The government of B.C. is holding the line on fiscal prudence and continues to reduce and control government spending to address declining revenues, Finance Minister Michael de Jong said today with the release of the Second Quarterly Report.
The projected deficit for 2012-13 is $1.47 billion, a $328-million increase from the First Quarterly Report due primarily to the change in the completion date of the sale of the Little Mountain property. Higher revenues from personal and corporate income taxes resulting from higher tax assessments in 2011 are offset by decreased revenues from property tax and property transfer tax, and a decline in coal prices. Overall revenue is down $202 million from the First Quarterly Report projection.
Ministries continue to reduce discretionary spending to mitigate the $241-million impact of the natural gas market on revenues. Government has identified $176 million so far this year and is on target to find the remaining $65 million required, including through savings in government operations such as travel and discretionary spending, freezing salaries for public sector management, and continuing the public service hiring freeze. Despite numerous changes in components of the 2012-13 forecast, there is no increase to overall projected government spending in 2012-13 compared to the forecast in the First Quarterly Report.
B.C. will maintain a forecast allowance of $100 million as a buffer against future economic and fiscal risks. This allowance has been reduced $50 million from the First Quarterly Report, as the risks to the forecast will have a reduced impact midway through the fiscal year.
At $6.9 billion, total capital spending is projected to be $152 million lower than Budget 2012. The taxpayer-supported debt forecast stands at $38.47 billion-$205 million lower than the projection in the First Quarterly Report, reflecting lower borrowing for operating purposes. The lower debt reduces the taxpayer-supported debt to GDP ratio by 0.1 percentage point from the First Quarterly Report to 17 per cent.
B.C. remains on track for re-implementation of the PST on April 1, 2013, with all previously permanent exemptions in place. Government has released several publications for B.C. businesses providing plain-language guidance on the application of PST and related exemptions, subject to approval of the legislature. Businesses are also being encouraged to register for the PST starting Jan. 2, 2013.
See the attached backgrounder for more on the transition to PST, and visit: www.PSTinBC.ca
Minister of Finance Michael de Jong -
"We've had to make some tough choices in order to protect the B.C. economy, create jobs and make life more affordable for families. We have successfully controlled spending, currently below the average rate of growth for the last 10 years, and we did it while protecting investments in priority programs like health care and education."
"We continue to monitor the fiscal and economic situation closely and are assessing our spending and revenues thoroughly as part of the budget process. Given what we know today, we intend to balance the budget in 2013-14. When I consulted the Economic Forecast Council a couple weeks ago, they expressed cautious optimism that B.C.'s real GDP growth will slightly outperform the Canadian average in 2013. We will re-survey them again in January to ensure we incorporate the most up to date information in Budget 2013."
British Columbia's 2012-13 Second Quarterly Report is available online at: www.gov.bc.ca/fin
Second Quarterly Report 2012 presentation: http://www.newsroom.gov.bc.ca/downloads/Second_Quarterly_Report_2012.pdf
Additional photos are available here: http://www.flickr.com/photos/bcgovphotos/sets/72157632125921984/with/8228090882/
A backgrounder follows on transition back to the PST.
Ministry of Finance
PST re-implementation timeline
As committed, the PST is being re-implemented on April 1, 2013, with all permanent exemptions.
Provincial business registration and outreach
Government increased business outreach activities in October to explain the timeline for re-implementation of the PST, what assistance is available to business, how to register, and to promote the new e-services option, eTaxBC. This new online service will make administration of the sales tax easier for businesses. Starting Jan. 2, 2013, eTaxBC services will be available for online registration.
Return to PST tools and services available to help keep businesses informed during the transition include:
- One-on-one consultations with a ministry tax specialist.
- New notices and bulletins on the application of PST and related exemptions.
- Online webinars covering the general principles of the PST and eTaxBC.
- Video: Returning to the PST - An Overview for Business.
- Calling a toll-free number with questions about the new PST (1 877 388-4440).
- Emailing questions to: CTBTaxQuestions@gov.bc.ca
- In-person seminars covering the general principles of the PST and eTaxBC.
Letters were mailed out to over 160,000 B.C. businesses in late September advising how to get information on the return to PST, and government has reached out to chambers of commerce and business associations to offer presentations with information businesses need for the transition. Additional public information is under development to support businesses in their return to PST.
A new provincial sales tax notice, General Transitional Rules for the Re-Implementation of the Provincial Sales Tax, was recently issued. These general transition rules describe how and when PST applies to transactions that straddle April 1, 2013, and should be read in conjunction with federal transitional rules for the elimination of the HST in B.C. The rules outlined in the notice are subject to the approval of the legislative assembly in spring 2013.
The New Housing Transition Tax and Rebate Act is being brought into force on Dec. 1, 2012. This act imposes a temporary transition tax of two per cent on purchasers of certain newly constructed or substantially renovated housing fully or partially constructed under the HST, where ownership and possession transfer on or after April 1, 2013. The regulation to the act specifies tax-related information that builders are required to provide to purchasers to ensure a shared understanding of the taxes and rebates that apply under the transition rules. The new housing transitional rules help ensure the amount of tax payable on a newly constructed home during the transition period is comparable to the amount of tax payable on a home fully constructed under the PST, regardless of when construction begins. The new housing transitional rules were first announced on Feb. 17, 2012. The provisions of the act will be administered by the federal Canada Revenue Agency.
The Ministry of Finance continues to work on developing the regulations, and transitional and consequential amendments to support the Provincial Sales Tax Act, which received royal assent on May 31, 2012. Government plans to publicly release a final proposed version of the Provincial Sales Tax Act with proposed amendments in late December. All amendments to legislation require the approval of the legislative assembly, expected in spring 2013.
Provincial systems development and administration
The Ministry of Finance continues to make progress on the new e-service called eTaxBC, available Jan. 2, 2013, that will benefit businesses by allowing online PST registration, tax return filing and payment, and self-service options.
Hiring is underway for tax administration positions required for the return of the PST, and government has finalized its arrangements with the Canada Revenue Agency on returning staff to administer the PST.
More than 100,000 businesses will need to register to collect the PST, and about 30,000 of those are new businesses that have only existed under an HST tax system. They will need to learn to administer the PST in tandem with the GST, and adjust their accounting and administrative systems and prepare to collect a second sales tax, as of Apr. 1, 2013.
More information on the return to PST and links to related publications can be found in the business outreach and moving forward sections of: www.PSTinBC.ca
Ministry of Finance